Small business confidence in the UK falls to its lowest level since the pandemic
Confidence among UK small business owners has fallen to the lowest since the depths of the coronavirus pandemic as they are squeezed by rising costs and falling revenues, according to the Federation of Small Businesses.
Their outlook has turned increasingly pessimistic over the past three months amid fears the economy is headed for recession.
The regular survey of members showed that overall net confidence reached -35.9 in the three months ended September, down 11.2 points from the previous quarter.
Almost half reported that sales fell in the third quarter, compared with less than a third who reported an increase. More than 40 percent expect revenue to fall further in the next quarter as pressure on the economy mounts.
Martin McTague, FSB national chairman, warned that new chancellor Jeremy Hunt’s reversal in tax cuts this week could further dampen sentiment. “Tax increases now will not generate growth and we risk high taxes with little or no growth for the foreseeable future,” he said.
Rising costs continued to hit the majority of small businesses, with nine in ten complaining about the increasing burden of energy and labor costs. More than two-thirds of employers increased wages by an average of 4.5 percent last year.
The lobby group said more and more small businesses are relying on debt to survive. The number of companies applying for funding rose to 13 percent over the past three months — the third straight quarter — compared to 9 percent at the start of the year.
Of these, nearly half used funding to manage cash flow, up from 35 percent in the previous quarter, while just a quarter requested funding to expand their business, up from 29 percent in the previous quarter.
The majority were offered interest rates of between 5 and 10 per cent, with borrowing costs rising amid expectations that the Bank of England will hike interest rates next month.
The increasingly negative sentiment also spilled over into the normally buoyant technology sector, where an ongoing membership survey by trade association TechUK showed a sharp fall in business confidence compared to the first quarter of this year.
Just 12 percent of tech companies surveyed believed the outlook would improve over the next 12 months, compared with more than 70 percent in February and October 2021, when the Covid-19 pandemic was still affecting the economy.
Neil Ross, Associate Director of Policy at TechUK, which represents 900 technology companies, said rising wage and energy costs were the most immediate factors affecting sentiment. Looking ahead to 2023, the biggest constraint remains access to sufficient talent, he added.
“The tech sector is resilient and has weathered major challenges like Brexit and Covid-19, but recent economic headwinds, rising energy and labor costs and longer-term concerns about access to talent are starting to bite,” he said.
https://www.ft.com/content/906b9030-7608-46e7-8e9d-81678eecb78e Small business confidence in the UK falls to its lowest level since the pandemic